Hepatocyte growth factor activator inhibitor-1 (HAI)-1 is an epithelial Kunitz-type transmembrane serine protease inhibitor that is encoded by the SPINT1 gene. HAI-1 displays potent inhibitory activity toward a large number of trypsin-like serine proteases. HAI-1 was recently shown to play an essential role in postnatal epithelial homeostasis. Thus, Spint1-deficient mice were found to display severe growth retardation and are unable to survive beyond postnatal day 16. The mice present histologically with overt hyperkeratosis of the forestomach, hyperkeratosis and acanthosis of the epidermis, and hypotrichosis associated with abnormal cuticle development. In this study, we show that loss of inhibition of a proteolytic pathway that is dependent on the type II transmembrane serine protease, matriptase, underlies the detrimental effects of postnatal Spint1 deficiency. Matriptase and HAI-1 precisely co-localize in all tissues that are affected by the Spint1 disruption. Spint1-deficient mice that have low matriptase levels, caused by a hypomorphic mutation in the St14 gene that encodes matriptase, not only survived the neonatal period but were healthy and displayed normal long-term survival. Furthermore, a detailed histological analysis of neonatal, young adult, as well as aged mice did not reveal any abnormalities in Spint1-deficent mice that have low matriptase levels. This study identifies matriptase suppression as an essential function of HAI-1 in postnatal tissue homeostasis.